Division P of Turbo Corporation Has the Capacity for Making

question 125

Multiple Choice

Division P of Turbo Corporation has the capacity for making 75,000 wheel sets per year and regularly sells 60,000 each year on the outside market.The regular sales price is $100 per wheel set,and the variable production cost per unit is $65.Division Q of Turbo Corporation currently buys 30,000 wheel sets (of the kind made by Division P) yearly from an outside supplier at a price of $90 per wheel set.Division Q would like to buy the 30,000 wheel sets it needs annually from Division P at $87 per wheel set.What would be the change in annual operating income for the company as a whole,compared to what it is currently?

• A) $135,000.
• B) $225,000.
• C) $600,000.
• D) $750,000.

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Definitions:

Palpation

The method of examining parts of the body by touch, especially for medical purposes.

Texture

The feel, appearance, or consistency of a surface or substance, often perceived through touch.

Temperature

A measure of the hotness or coldness of a body or environment.

Objective Information

Information that is fact-based, measurable, and observable, free from personal feelings or biases.